Life Insurance Annuities Basics

If you're looking to provide for your family upon your death, life insurance policies are sure to be on your mind. For the basics of life insurance and policies that offer annuities, it's good to know the ins and outs so that you make a wise decision.

When you think of life insurance, you generally think of a way to provide for your family in the case of your death. But for many, life insurance can be a way to provide for you and your family while you're still living. Used much like an IRA might be used, life insurance annuities are made to provide the buyer with payments over time, usually upon retirement. Like the IRA, you are not taxed until you begin withdrawing funds. The earnings, as they're growing, are tax-deferred. One thing to remember is that you are penalized if you withdraw prior to certain age points.

Two types of life insurance annuities exist, fixed and variable. The fixed life insurance annuities guarantee a specific payout upon withdrawal while the variable guarantee nothing, but they do have the possibility of returning a greater investment. There is also a death benefit equivalency that pays out either the current value of the policy or what you've paid into it. If you pass away during the accumulation part of the policy, your heirs will receive back what you've paid into it.

If you're looking for a dual-purpose policy, purchasing a life insurance annuity could be the answer for you. Talk with your local insurance agent for more details.